Design–build is a project delivery system used in the construction industry. It is a method to deliver a project in which the design and construction services are contracted by a single entity known as the design–builder or design–build contractor. It can be subdivided into architect-led design–build and contractor-led design–build.
Design–bid–build, also known as Design–tendertraditional method or hardbid, is a project delivery method in which the agency or owner contracts with separate entities for the design and construction of a project.
A general contractor, main contractor or prime contractor is responsible for the day-to-day oversight of a construction site, management of vendors and trades, and the communication of information to all involved parties throughout the course of a building project.
Construction management (CM) is a professional service that uses specialized, project management techniques and software to oversee the planning, design, and construction of a project, from its beginning to its end. The purpose of Construction management is to control a project's time / delivery, cost and quality—sometimes referred to as a project management triangle or "triple constraints." CM is compatible with all project delivery systems, including design-bid-build, design-build, CM At-Risk and Public Private Partnerships. Professional construction managers may be reserved for lengthy, large-scale, high budget undertakings, called capital projects.
Bid rigging is a fraudulent scheme in procurement auctions resulting in non-competitive bids and can be performed by corrupt officials, by firms in an orchestrated act of collusion, or between officials and firms. This form of collusion is illegal in most countries. It is a form of price fixing and market allocation, often practiced where contracts are determined by a call for bids, for example in the case of government construction contracts. The typical objective of bid rigging is to enable the "winning" party to obtain contracts at uncompetitive prices. The other parties are compensated in various ways, for example, by cash payments, or by being designated to be the "winning" bidder on other contracts, or by an arrangement where some parts of the successful bidder's contract will be subcontracted to them. In this way, they "share the spoils" among themselves. Bid rigging almost always results in economic harm to the agency which is seeking the bids, and to the public, who ultimately bear the costs as taxpayers or consumers.
R v Ron Engineering and Construction (Eastern) Ltd, of 1981 is the leading Supreme Court of Canada decision on the law of tendering for contracts. The case concerned the issue of whether the acceptance of a call for tenders for a construction job could constitute a binding contract. The Court held that indeed in many cases the submission of an offer in response to a call for tenders constitutes a contract separate from the eventual contract for the construction. With the release of the decision, the tendering process practiced in Canada was fundamentally changed.
The processes of government procurement in the United States enable federal, state and local government bodies in the country to acquire goods, services, and interests in real property.
A bill of quantities is a document used in tendering in the construction industry in which materials, parts, and labor are itemized. It also (ideally) details the terms and conditions of the construction or repair contract and itemizes all work to enable a contractor to price the work for which he or she is bidding. The quantities may be measured in number, area, volume, weight or time. Preparing a bill of quantities requires that the design is complete and a specification has been prepared.
A cost estimate is the approximation of the cost of a program, project, or operation. The cost estimate is the product of the cost estimating process. The cost estimate has a single total value and may have identifiable component values.
Bidding is an offer to set a price tag by an individual or business for a product or service or a demand that something be done. Bidding is used to determine the cost or value of something.
Construction law is a branch of law that deals with matters relating to building construction, engineering, and related fields. It is in essence an amalgam of contract law, commercial law, planning law, employment law and tort. Construction law covers a wide range of legal issues including contract, negligence, bonds and bonding, guarantees and sureties, liens and other security interests, tendering, construction claims, and related consultancy contracts. Construction law affects many participants in the construction industry, including financial institutions, surveyors, quantity surveyors, architects, builders, engineers, construction workers, and planners.
Construction cost estimating software is computer software designed for contractors to estimate construction costs for a specific project. A cost estimator will typically use estimating software to estimate their bid price for a project, which will ultimately become part of a resulting construction contract. Some architects, engineers, construction managers, and others may also use cost estimating software to prepare cost estimates for purposes other than bidding such as budgeting and insurance claims..
The New Engineering Contract (NEC), or NEC Engineering and Construction Contract, is a formalised system created by the UK Institution of Civil Engineers that guides the drafting of documents on civil engineering, construction and maintenance projects for the purpose of obtaining tenders, awarding and administering contracts. The NEC contract is widely used in both the United Kingdom and Hong Kong. There have been attempts, largely unsuccessful, at introducing the NEC contract into both Australia and New Zealand from at least 1994 but the contract remains relatively obscure in both countries.
Operational bills are a tendering document for estimating costs prepared by architects that describes a construction project in terms of the operations needed to build it. This form of document contrasts with that of bills of quantities in which such tendering and estimation is limited to the materials in the completed work. Operational bills have the advantages of enhancing communication between design and production, enabling realistic tender pricing, and making the preparation of critical-path analysis easy for the contractor.
Fast-track building construction is construction industry jargon for a project delivery strategy to start construction before the design is complete. The purpose is to shorten the time to completion.
Suicide bidding is a response to a tendering exercise in which a potential supplier, anxious to win business, submits a proposal to carry out the work for less than it will cost. These procurement processes are typically modelled as reverse sealed-bid auctions with the lowest bid winning.
Retainage is a portion of the agreed upon contract price deliberately withheld until the work is substantially complete to assure that contractor or subcontractor will satisfy its obligations and complete a construction project. A retention is money withheld by one party in a contract to act as security against incomplete or defective works. They have their origin in the British construction industry Railway Mania of the 1840s but are now common across the industry, featuring in the majority of construction contracts. A typical retention rate is 5% of which half is released at completion and half at the end of the defects liability period. There has been criticism of the practice for leading to uncertainty on payment dates, increasing tensions between parties and putting monies at risk in cases of insolvency. There have been several proposals to replace the practice with alternative systems.
An invitation to tender is a formal, structured procedure for generating competing offers from different potential suppliers or contractors looking to obtain an award of business activity in works, supply, or service contracts, often from companies who have been previously assessed for suitability by means of a supplier questionnaire (SQ) or pre-qualification questionnaire (PQQ).
A construction contract is a mutual or legally binding agreement between two parties based on policies and conditions recorded in document form. The two parties involved are one or more property owners and one or more contractors. The owner, often referred to as the 'employer' or the 'client', has full authority to decide what type of contract should be used for a specific development to be constructed and to set out the legally-binding terms and conditions in a contractual agreement. A construction contract is an important document as it outlines the scope of work, risks, duties and legal rights of both the contractor and the owner.
Early contractor involvement (ECI) is a type of construction contract where the principal contractor is engaged at an early stage in a project to offer input into the design phase. It is in contrast to the design–bid–build model where the contractor is only brought onboard at the end of the design phase. The model allows the contractor to have an input in the design of the scheme and suggest value engineering changes. Studies have shown that savings of around 10% in construction phase time and 7% in cost are achievable through the use of ECI. The ECI model has become increasingly popular in the United Kingdom since the early 2000s and is also used in Australia and New Zealand.
